From time to time, the U.S. Treasury buys back Treasury marketable securities that have not yet matured.
Why does Treasury buy back Treasury marketable securities?
Buying back securities has several advantages for the U.S. government.
- Buybacks are a good cash management tool. They give us flexibility to manage the public debt.
- By buying higher-yield debt and replacing it with lower-yield debt, we may be able to reduce what the government pays for interest.
- We can absorb extra cash when revenues are more than the government needs for immediate spending.
- We can offer new securities in appropriate size and maturity, giving us more control over the maturity structure of the public debt.
Who may participate in a buyback?
Only primary dealers, as designated by the Federal Reserve Bank of New York, may submit offers in response to a buyback announcement.
How does a buyback work?
A buyback has several phases:
- Treasury announces the buyback.
- Interested primary dealers voluntarily submit offers.
- The Federal Reserve Bank of New York (FRBNY) evaluates the offers.
- Participating dealers learn what was accepted.
- Treasury publishes the results.
- Treasury pays for the securities it has bought back.
Treasury announces the buyback
Treasury calls a buyback an "operation."
Each announcement includes this information:
- List of eligible securities
- Eligible maturity dates
- Par amount to be bought back
- Date of the operation
- Start time for the operation
- Closing time for the operation
- Settlement date
- Par amount allowed for each offer
- Maximum number of offers per dealer per security
- Other relevant information
Interested primary dealers voluntarily submit offers
The entire operation of a buyback is done through the FedTrade system.
Interested primary dealers submit offers that comply with the terms of the announcement.
The FRBNY evaluates the offers
The Federal Reserve Bank of New York decides what offers to accept based on how close the offers are to the prevailing market prices at the end of the offer time, as well as measures of relative value as appropriate.
Participating dealers learn what was accepted
The FedTrade system tells participating dealers about their accepted offers.
Treasury publishes the results
Shortly after the operation, Treasury publishes summary results.
In addition to basic information identifying the operation, summary results include
- Total par amount offered
- Total par amount accepted
- Number of eligible issues
- Number of accepted issues
- Amounts for each eligible security
By close of business on the day of the operation, Treasury publishes detailed results of each eligible security.
We did buybacks from 2000 through 2002. We did none between 2003 and 2013. Since 2014, we have again been doing buybacks.
See the buyback results for all years. Also see a summary of the historical information from 2000 through 2002.
Treasury pays for the securities it has bought back
Treasury usually settles one business day after the operation and pays the par amount of the securities.
Where can I see buybacks in Treasury reports?
If you want to see the total par amount Treasury has bought back in a given time period, we report that as a redemption on various statements, such as:
- Daily Treasury Statement, Table III-A, "Public Debt Transactions"
- Monthly Statement of the Public Debt, Table III, "Detail of Treasury Securities Outstanding"